Sramana Mitra: You said it took you two years to get to $60,000 annual revenue. That’s 2010 then, right? Florin Cornianu: It took us all the way to 2014 to get to a million dollars in revenue. ...
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Like many parents, Zigazoo founder Zak Ringelstein worries about his children’s screen time. His worries only grew when COVID-19 led to school shutdowns and kids came home to a world of remote learning. Now, as lockdowns extend, Ringelstein is learning to embrace screen time as a way to sneak education and entertainment into his kids’ digital diet.
Ringelstein, the former founder of UClass (acquired in 2015), launched Zigazoo, which he describes as a “TikTok for kids.”
Zigazoo is a free app where kids can answer short video-based exercises that they can answer through video and share responses with friends. Exercises range from how to create a baking soda volcano to making fractions out of food, and targets kids from preschool to middle school.
To ensure the app’s privacy, Ringelstein says that parents should be the primary users of the app. Users have to accept a friend request in order for their content to be seen, a move Ringelstein sees as key to avoiding bad actors or potential bullying.
Additionally, Zigazoo uses an API through SightEngine to moderate content.
Ringelstein’s first users were his own kids, a test he says was very rewarding.
Ringelstein’s son participating in a Zigazoo prompt.
The testing process made him realize that kids like to create longer videos, and watch smaller videos, so Zigazoo is figuring out an attention span for viewing. Currently, average time on site per user has gone up to 19 minutes and 43 seconds per day.
Ringelstein pointed to “Sesame Street” as his inspiration. Mixing education and entertainment has proven successful for a number of businesses. Kids were drooling in front of the screen watching the characters of “Sesame Street,” spending mindless hours staring at the television set, he recalls.
“The creators of Sesame Street…used the medium to educate kids and entertain them at the same time,” Ringelstein said. Vox described “Sesame Street” as a “bedrock for educational television,” bringing loved characters to the table with former First Lady Michelle Obama or using a silly song to teach kids about recycling.
In one month, Zigazoo has had 100,000 videos uploaded to and downloaded from its site.
While Zigazoo claims to be a “TikTok” for kids, it is competing with the platform itself. Some teachers have turned to TikTok to create lessons on solar cell systems and experiments.
Others are putting together guides of “kid friendly” TikTok creators. And TikTok itself recently let parents set restrictions on content, DMs and screen time for their kids.
Video-based learning is a better way for students to engage actively in an educational activity, versus passively reading a paragraph from a Google doc, according to Ringelstein.
Combining education with entertainment comes with a set of risks around child safety. Last March, The New York Times wrote a story about how “kidfluencers” has grown as a concept, where parents put their kids online, touting brands, and make money off of it. The resulting ethical concerns are why Ringelstein is confident that Zigazoo is needed.
“Zigazoo is a not a kid play date smack dab in the middle of an adult party like YouTube and TikTok, it is a universe tailor-made for kid safety, learning and enjoyment,” he said.
Ringelstein sees Zigazoo’s “friend” versus “follow” feature as key to the safety of kids: Unlike TikTok, where there is a public feed and users can follow everyone, Zigazoo requires users to opt-in to being followed, similar to Facebook.
The partnerships will allow Zigazoo to post verified content using favorite and well-known characters to teach kids about the subjects they care about. And in a world where digital detoxes are no longer a reality, a smarter screen-time activity seems much needed.
Recently, Zigazoo partnered with The American Federation of Teachers for a capstone project directed at millions of K-12 students. Students are invited to submit a video using Zigazoo to encapsulate their learning experience over the past school year, which AFT says is a “far better way to sum up learning than a high-stakes test.”
This summer Ringelstein is launching “Zigazoo Channels” with a select group of major children’s entertainment companies, podcasts, museums, libraries, zoos, social media influencers and more.
French startup Majelan is pivoting a year after launching a podcast player and service. The company, created by former Radio France CEO Mathieu Gallet and Arthur Perticoz, is ditching the podcast aggregation side of its business and focusing on premium audio content going forward.
Like many podcast startups, Majelan faced some criticism shortly after its launch. Aggregating free podcasts with premium content next to them à la Luminary is a controversial topic in the podcast community. Spotify has been going down the same path, but Spotify is also an order of magnitude bigger than any other podcast startup out there.
Some podcast creators have decided to remove their podcast feeds from Majelan to protest against that business model.
Podcasts remain an open format. Creators can create a feed, users can subscribe to that feed in their favorite podcast app. You don’t have to sign up to a particular service to access a particular podcast — everything is open.
“We have decided to stop aggregating free podcasts — free podcasts mean podcasts, period. For us, podcasts are RSS feeds, it’s an open world,” Perticoz said in a podcast episode. “We need an app that is more focused on payment. We can’t aggregate free podcasts given that our strategy is paid content.”
The result is a more focused service that is going to launch on July 7th in France. After a free trial, you have to subscribe for €5 to €7 per month, depending on the length of your subscription. You can then access a library of premium audio content — Majelan rightfully doesn’t call them podcasts.
“Going forward, we’re going to focus on original content, we’re going to focus 100% on paid content,” Gallet said in the same podcast episode.
And in order to be even more specific, Majelan will focus on personal growth, such as creativity, activism, mindfulness, innovation, entrepreneurship and health. According to the co-founders, some content will be produced in house, some content will be co-produced with other companies, and the startup will also acquire existing podcasts and repackage them for Majelan.
That move has been in the works for a while. The startup pitched it to its board of investors back in December. Premium subscriptions have worked well for movies, TV and music. Now let’s see if subscriptions will also take off with spoken-word audio.
In today’s new world completely engulfed by COVID-19, all sorts of innovations are emerging to help the world overcome this difficult time: 3D printers are cranking out medical supplies; rapid advancements in testing have been made — now providing results in five minutes; teachers have transformed curricula to be taught entirely online. It’s humanity vs. the virus, and innovators around the world are acting as fast as they can.
Yet I was recently chatting with a leading Silicon Valley investor about what incentivizes entrepreneurship. To him — and his Silicon Valley peers — the answer was obvious: People are motivated to become heroes. Their ambition stems from an unquenchable thirst for being recognized as the victor and reaping the riches that come with it.
This view is troubling. It excludes many of the innovators responding to COVID-19 — people who are passionate about solving complex problems like poverty, public health issues or education. Working closely with over 100 global social entrepreneurs at MIT Solve, I’ve noticed a very different profile than the Silicon Valley hero. The entrepreneurs I know want to solve real problems — not become influencers or Netflix stars.
Take Luis Garza, Founder of Kinedu, an app that provides parents with tools to promote their child’s development. Working on a child care chain in Latin America, Garza could sense the anxiety that first-time caretakers felt when it came to raising a baby. He wanted to find a solution that would help everyone know what to do, and “feel like a good parent.” Since its founding, Kinedu has impacted 4 million lives, and now, in response to COVID-19, Kinedu is offering free subscriptions to any parent in need of support while they self-isolate at home.
A recent experiment measuring drivers of innovation we ran with Columbia Business School and Carnegie Mellon, points to the same conclusion: Not all entrepreneurs are motivated by fame and fortune. If we assume they are, we’re excluding those who aren’t — limiting opportunities for these “helper” entrepreneurs.
We emailed 11,000 innovators across 76 countries and asked them to apply to Solve’s Global Challenges. Global entrepreneurs can submit their business solutions to be selected for funding, mentorship and support. Each individual randomly received one of three messages: one emphasizing social impact, one emphasizing prize funding, and one neutral control message. We measured their email engagement to determine which messages resonated the most.
The findings convey that women are more driven by social impact, while men are more driven by funding. Country culture also matters; people in more altruistic cultures were more driven by social impact, while those in less altruistic cultures were more driven by funding.
To be truly inclusive — of gender, culture and background — we must be intentional in how we inspire and support entrepreneurs. We must speak to both instincts: the hero and the helper. But speaking a language that invites diverse participation is only the first step. Here are three guidelines for investors and supporters who want to intentionally motivate diverse innovators.
Strip industry jargon from your application. Coach innovators to prepare for a pitch. Tailor your language to appeal to mission-driven innovators — not just money-driven innovators. These are all ways to make your program feel accessible to an innovator without an MBA or tech background — someone like Arturo Hernández, a comedian turned startup founder who created Supercívicos, an app whose 1.5 million users geolocalize urban challenges and crowdsource support for public officials to address them.
When did we decide that hoodie-wearing founders building the next unicorn with “hockey stick growth” is the gold standard for promising ventures? What’s wrong with zebras? (They’re real; they have two-color stripes: for-profit and for-purpose; and they collaborate to survive). Nicole Bassett who co-founded The Renewal Workshop — which provides zero-waste, circular solutions for apparel and textile brands — is now part of the $51 billion secondhand clothes industry. She turned a new business model for recycling and upcycling clothing into a rapidly growing, for-profit startup, saving over 100,000 pounds of textiles from landfills while driving revenue.
While financing is a crucial part of launching a new venture, we must recognize that other resources such as technical expertise or mentorship are just as important to social entrepreneurs. Founders that are mentored by a top-performing entrepreneur are three times more likely to lead top-performing companies themselves. Consider Ram Katamaraja, creator of Refactored.ai, a data and analytics skills training platform. He needed marketing and branding support to scale and notes that a mentor “made what could have been a turbulent and intimidating process gratifying and extremely productive.” Refactored.ai has upskilled more than 6,000 users.
If we don’t expand our understanding of a promising entrepreneur, lower the barrier to entry to our programs and provide tailored support, then we will ignore many of the game-changing ideas that will get us through this pandemic — and ultimately, leave big problems unsolved and large communities unserved.
Overjet, a startup focused on using AI to help dentists and insurance companies understand dental scans, today announced that it has raised $7.85 million in what it describes as a seed round.
According to Overjet’s CEO Wardah Inam (an MIT PhD in electrical engineering and computer science), the company raised the funds from Crosslink Capital, which led its round, and E14 Fund, which “only invests in MIT startups,” Inam said.
The MIT-E14 connection is not surprising, given that Overjet has been supported by two different MIT groups. Continuing the Boston-area educational links, the startup was incubated by the Harvard Innovation Lab, which Inam told TechCrunch that it is “growing out of” in terms of space.
The selection of Crosslink as its lead investor wasn’t accidental. Inam told TechCrunch that Overjet was interested in raising from Crosslink thanks to its prior investments into Weave, a startup whose software is often used in a dental context. (Weave raised a $70 million Series D at a near-unicorn valuation in 2019, TechCrunch previously reported.)
But enough about the money, let’s talk about what Overjet does.
When you go to the dentist, you’ll often get an x-ray taken of your teeth. Then, a dentist will read the chart and make some recommendations. They may say that you’re in good shape, and can come back for a cleaning in a few months. Or your dentist might tell you that some work is needed. The latter scenario is where Overjet comes into play.
According to Inam, Overjet’s “core technology [helps] to determine what treatments are needed.”
The CEO told TechCrunch in an interview that while most medical imaging AI services are focused on finding out if there is anything wrong (the startup executive gave an example of tumor detection) with someone, Overjet can “go one step further,” helping to not only note that there is a problem (tooth decay, to select a hypothetical), but the extent of the issue itself.
This ability to “analyze clinical data at scale” and “determine what treatments are necessary,” as Overjet’s CEO put it over the phone, is potentially attractive to both dentists and insurance companies alike.
For dentists, it’s the ability to lean on AI-styled technology to help confirm their diagnosis, or help them not miss issues that are hard to spot. Overjet may also be able to help insurance companies process their huge influx of dental images more quickly. Currently, Inam told TechCrunch, “every crown that is sent to any major insurance company is reviewed” manually by humans, something that is expensive.
AI might be able to better tell, and more quickly, if a claim is reasonable, and not fraudulent.
This also helps patients to a degree. Recalling our example of going to the dentist, how much control do you really have over the work that is done to your teeth? Not a lot, frankly. This opens up the chance for dentists to pursue unneeded treatments for financial gain. If Overjet can help root out some fraud in the system, it could lead to better patient care.
Chatting with a startup it’s hard to grok how good its tech is. In the case of Overjet, it’s nearly impossible. But if the company’s tech works as it thinks it does, it may be able to quickly grow inside its target market; we’ll have to vet the quality of its technology through the lens of business growth for the time being.
Overjet charges insurance companies per claim analyzed, even if it includes more than one x-ray. Dental practices pay on a SaaS model, Inam told TechCrunch.
The company currently has “around 20” people on staff, according to its CEO, and expects to grow this year. I’m super curious how many new customers the startup can gain this year, and how fast it can scale revenue, as well. More when we talk to Overjet again.
Sramana Mitra: When you say you have an operational team, what did your operational team do in this case? Parthib Srivathsan: We announced the deal on the 1st of April so it’s still early days. Our...
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Entrepreneurs are invited to the 488th FREE online 1Mby1M mentoring roundtable on Thursday, June 4, 2020, at 8 a.m. PDT/11 a.m. EDT/5 p.m. CEST/8:30 p.m. India IST. If you are a serious entrepreneur,...
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It was a busy week in security.
Newly released documents shown exclusively to TechCrunch show that U.S. immigration authorities used a controversial cell phone snooping technology known as a “stingray” hundreds of times in the past three years. Also, if you haven’t updated your Android phone in a while, now would be a good time to check. That’s because a brand-new security vulnerability was found — and patched. The bug, if exploited, could let a malicious app trick a user into thinking they’re using a legitimate app that can be used to steal passwords.
Here’s more from the week.
The COVID-19 pandemic will have a profound impact on robotics, as more companies look to automation as a way forward. While wide-scale automation had long seemed like an inevitability, the pandemic is set to accelerate the push as corporations look for processes that remove the human element from the equation.
Of course, Locus Robotics hasn’t had too much of an issue raising money previously. The Massachusetts-based startup, which raised $26 million back in April of last year, is adding a $40 million Series D to its funds. That brings the full amount to north of $105 million. This latest round, led by Zebra Technologies, comes as the company looks to expand operations with the launch of a European HQ.
“The new funding allows Locus to accelerate expansion into global markets,” CEO Rick Faulk said in a release, “enabling us to strengthen our support of retail, industrial, healthcare, and 3PL businesses around the world as they navigate through the COVID-19 pandemic, ensuring that they come out stronger on the other side.”
Locus has already seen good traction here in the States for its bin-moving robots. In February, the company announced that its robots have passed 100 million units picked. The event occurred at a DHL facility in Pennsylvania. The following month, DHL agreed to deploy 1,000 of the company’s robots in 2020. In April, UPS announced that it would be piloting Locus robots in its own facilities.
Here’s another edition of “Dear Sophie,” the advice column that answers immigration-related questions about working at technology companies.
“Your questions are vital to the spread of knowledge that allows people all over the world to rise above borders and pursue their dreams,” says Sophie Alcorn, a Silicon Valley immigration attorney. “Whether you’re in people ops, a founder or seeking a job in Silicon Valley, I would love to answer your questions in my next column.”
“Dear Sophie” columns are accessible for Extra Crunch subscribers; use promo code ALCORN to purchase a one- or two-year subscription for 50% off.
Dear Sophie:
I live in Sydney and an American company is offering my husband a professional job and a work visa. I’m eligible to receive a visa and a work permit under my husband’s visa. Can I form my own startup with that dependent visa and work permit or do I need to find a job with an American company? How long would we be able to stay in the U.S.?
— Aspiring in Australia
Dear Aspiring in Australia:
Congrats on naming your desire and stating your intention to start a company. That’s exciting!
Based on your question, it sounds like the company is sponsoring your husband for an E-3 visa for Australian professionals, and you would be eligible for a dependent E-3 visa and employment authorization document (EAD), also known as a work permit. Recently, I’ve been getting a lot of questions from spouses about dependent visas and working. Check out my podcasts on dependent visas and specifically about the E-3 visa for additional information.
Meal kits have had a rush of interest in recent months, with people turning to them to vary the pace of (and in some cases, completely replace) making meals at home, or ordering take out, at a time when many of us are spending a lot of time at home. Now a startup that has combined the concept of meal kits with that of smart ovens to do the cooking is announcing some funding to help expand its business.
Tovala, maker of a smart convention/broiling/steaming oven designed to automatically cook a variety of low-labor meal-kit-based meals also created by the startup (alongside cooking other food), has raised $20 million.
It’s a Series B led by Finistere Ventures — the VC that specialises in disruptive food-related businesses — with participation also from Comcast Ventures, OurCrowd and Rich Products Ventures; as well as previous backers Origin Ventures, Pritzker Group Venture Capital, Crate & Barrel founder Gordon Segal, New Stack Ventures and the University of Chicago. It brings the total raised by the company, which was originally incubated at Y Combinator, to just under $42 million.
Chicago-based Tovala is not disclosing its current valuation, but founder and CEO David Rabie confirms that it is materially higher than its previous valuation. (For some context, PitchBook notes that it was a modest $38 million as of last May when it raised a Series A extension, but Rabie would not confirm the amount.) It comes as the startup has crossed 1 million meals sold to its customers since launching in 2017, although it’s not disclosing how many of its ovens it has sold.
The bulk of Tovala’s growth has been in the last 10 months, Rabie said: “Our growth has been dramatic since last year, and COVID-19 has accelerated it in every way.”
Rabie has worked at a variety of food companies over the years, among other jobs, including a short stint at Google, and he describes himself as having “a passion for cooking” instead of ordering take-out when it comes to eating at home. All the same, he said that he started Tovala in a period when he was especially short on time. So short, in fact, that even a typical meal-kit service that requires some chopping and cooking and usually around 20-30 minutes of preparation was too much time for him to give over to the process.
Around then, he also noticed that there wasn’t a service that had thought to combine the hardware of a handy “smart” oven with services around it in the area of delivering meal kits. “There weren’t smart ovens but there were smart things, and there were meal kits,” he said, “but nothing that combined those, nothing that hit the nail on the head.”
Tovala’s basic premise is that it provides a complete meal, where everything is ready-chopped, marinated and blended, the work you do as the customer is simply to open packets, add things to each other in less than a minute in the pre-supplied baking trays, scan QR codes using the Tovala app, and let its oven then do the rest.
The oven itself sells for $299 if you buy it on its own, or $199 if you commit to ordering meals six times over the next six months (which sell currently for $11.99 per single serving).
While there is a simplicity in the basic value proposition of selling an oven designed to cook the meals you have pre-prepared and sell along with it, that business alone is highly competitive. Considering just the many options of “short-cutting” cooking from scratch, you have very direct competitors like Suvie, which also makes ovens and meal kits; various meal kit companies like Blue Apron and Hello Fresh; a plethora of ready-meals you can microwave, boil or bake from grocery stores and other places; plus the many businesses out there doing deliveries of take-out food.
That’s where Rabie’s approach considering other ways of extending Tovala’s business become interesting.
The oven, for starters, can also be used as a convection/broiling/steaming oven for anything you might want to cook, but it has also been pre-programmed to cook some 750 other ready-meals (such as Trader Joe’s burritos) by way of scanning codes into the Tovala app. I asked, but as of yet Rabie said Tovala does not have any plans for a “Nespresso”-style approach of working with any other meal kit providers to make meals that can be cooked in its oven.
Tovala’s also done one “pop-up” chef experience where a well-known Chicago cook created a few meals for Tovala, and that proved popular and might be repeated with others, Rabie said. And it’s not all focused on its own hardware. Last year the company partnered with LG so that people could buy its ready-meals to be cooked in LG smart ovens.
It also counts the chicken giant Tyson as an existing investor. For now, the two have yet to collaborate on meals for the Tovala oven, Rabie said, but you can imagine how it and others (such as Finistere portfolio company Memphis Meats) might craft specific dishes for the Tovala oven, creating further revenue streams for the startup and more use cases for people who fork out to buy its hardware.
On the subject of the hardware: Considering how so many startups built around “disruptive” hardware have stumbled over the years because of the unit economics, supply chain issues and other complications that fall under the maxim of “hardware is hard,” I asked if it’s been a stumbling block at all for Tovala. No, is the short answer.
“It’s a misconception that hardware is hard or expensive,” he said. “It’s always more expensive than software, but really it depends on how you go about it.” Some companies might spend a fortune on designing a product, “millions or tens of millions” on prototyping and more before ever getting anything out into the market.
“We did not go down that path,” he said. “We launched in 2017 having raised a few million dollars to build the oven and the food infrastructure. There is a way to do it without having to spend millions.” Wisely, he added that the trick is to scale with thoughtfulness: “Hardware fails when companies lose sight of their value propositions, and they forget what problem they are trying to solve.”
To that end, the funding is unlikely to be used for more development for now on the oven itself, he added.
“Tovala uniquely sits at the intersection of trends in the smart home and meal kit spaces: Meals enabled by an automated device, delivering convenience without compromise. We recognize Tovala’s potential to own the kitchen countertop and look forward to being part of their expansion journey as we increase our investment in the food space,” said Arama Kukutai, co-founder and partner at Finistere Ventures, in a statement. “Tovala demonstrated substantive growth and industry-leading retention even before the current shift in consumer food delivery models, and we think the company is poised to lead the reinvention of the food delivery market as it matures.”
Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.
Used-car marketplace Vroom continued its march towards going public yesterday with the release of an updated IPO filing. The documents it filed provides pricing information for a somewhat odd public offering.
As a business, the heavily venture-backed Vroom is immature. It generates very little gross profit from its revenue (implying that it is unable to price its services attractively from a business perspective), and while it has managed consistent revenue growth, the company’s top-line gains (+39.3% in 2019) came at the price of rising unprofitability (+67.9% in 2019, on a net basis).
Even more, the firm’s numbers are deteriorating in Q2 due to COVID-19 and related disruptions. But, today’s public markets are prepared to move inversely to news, and Vroom, by going public as Q2 crawls in June, may manage to get its IPO done while stocks are back near record highs.
Let’s explore the company’s proposed $15 to $17 IPO price range and its implied valuation to see if we can parse what the company (and its investors) might be thinking.
In its S-1/A filing, Vroom reports that it expects to price its IPO at between $15 and $17 per share, a range that may shift higher or lower depending on investor enthusiasm, or lack thereof. Vroom hopes to sell 18.75 million shares in its debut, generating gross proceeds of between $281.25 million and $318.75 million.
Bill.com (NYSE:BILL) went public in December last year. In spite of the recent market turbulence and the global economic conditions, its stock has had a strong run. Since listing, the company’s stock...
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Sramana Mitra: What was the product that you got together? Florin Cornianu: It was a very small script that allowed you to build a contact form and put it on your website. Back then, there wasn’t any...
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“Employee Wellbeing” SaaS platforms have been around for some time. Both regulation and increasing stress levels and health problems in the workplace have fed the rise of this sector of tech, and with many corporates painting long-term contracts with providers, it’s a lucrative business. Furthermore, with the COVID-19 pandemic ongoing, large remote-workforces look here to stay for the foreseeable future, and are likely to need these platforms more than ever. Notable players in the space include Rally Health, Dacadoo and Virgin Pulse.
Tictrac is a startup in this space that uses a combination of personalized content, lifestyle campaigns and incentivized challenges to motivate staff. It combines this with behavioral science to identify trigger points to egg-on staff to positive behaviors. Existing investors of Tictrac include world-class tennis champion Andy Murray and American basketball player Carmelo Anthony, who has been named an NBA All-Star 10 times.
Today it secures a £6 million ($7.5 million) funding round led by London-based Puma Private Equity, bringing its total investment to date to £13.5 million ($17 million). The latest round will allow the company to expand its Employee Wellbeing platform for its thousand-plus customers. It will also now expand its Enterprise platform, which enables insurance companies and health providers to engage their customers in their health and tailor relevant products and services to them.
Tictrac relies heavily on content, contributed by well-known health and fitness influencers, covering fitness, yoga, meditation, mindfulness, recipes and blog posts, which provide its users with inspiration and advice on how to improve their lifestyle.
Unlike a lot of other “Employee Wellbeing” platforms, users can follow the content or experts that they can relate to (much like with Instagram, Calm or Glo Yoga), powered by a campaign engine that delivers creative themes across Tictrac features, like healthy habit-forming action plans and activity challenges.
Founded in 2010, the company has partnered with healthcare and insurance providers including Aviva, Allianz and Prudential.
In a statement, Martin Blinder, CEO and founder of Tictrac, commented: “Now more than ever, companies have a greater role and responsibility in supporting the health of their workforce. And while businesses are focused on sustaining retention and productivity – particularly with so many people working remotely – they are now tasked with trying to navigate health issues such as burn-out and striking a healthy work-life balance.”
Rupert West, managing director at Puma Private Equity, said: “We have been consistently impressed with Tictrac’s ability to heighten health and wellbeing engagement, which in turn will help alleviate some of the pressures our health services continue to face.”
Pollen, the U.K.-headquartered travel and events marketplace, describes its company culture as built on principles of “freedom” and openness, including a well-publicised pay transparency policy. However, that doesn’t appear to always be the case with regards to the treatment of recently departing employees.
When the word-of-mouth marketing company laid off 69 staff from its various U.S. and Canada entities last month, axed staff were asked to sign a severance agreement that included a clause prohibiting them from disclosing the content of the agreement, including to current and former employees.
In addition, multiple sources tell TechCrunch the severance contracts feature a broader non-disparagement clause. Such clauses are typically used to prohibit current or former employees from talking about a company or its staff and leadership in a way that is harmful to the business or individuals associated with the business.
“It was basically an NDA masked as a severance agreement,” said one former Pollen employee, who asked not to be identified. “They dangled our last pay check in front of us so that we felt pressure to give away our rights, and they paired that with an abrupt cut off from the company. I was told I was laid off and then promptly removed from all correspondence within a 24-hour period.”
Pollen co-founder and CEO Callum Negus-Fancey doesn’t dispute the existence of either clause, but says both are a “standard inclusion” in severance agreements and were drafted by external employment lawyers. “However, we’re going to discuss internally if it’s necessary to continue to include these kinds of clauses given the company’s focus on transparency,” he added. “We strive to adopt best practices throughout Pollen.”
However, according to HR experts TechCrunch has spoken to, including one HR professional with years of experience working for large tech companies in the U.S., such confidentiality and non-disparagement clauses aren’t typically employed in more general redundancy situations. Instead, they are more commonly used where a severance contract is agreed after a dispute between a departing employee and the company, or when a company is concerned there could be adverse publicity.
“For a company that strives itself on transparency, there is actually a deep undertone of political rhetoric about what should or should not be talked about,” a former Pollen employee tells TechCrunch.
Meanwhile, Pollen, or rather JusCollege, one of its many brands and entities, did attract negative media headlines earlier this year as it grappled with the emerging coronavirus situation. Parents of students who canceled a spring break to Mexico in mid-March told NBC News that they weren’t offered refunds despite concerns over the virus and had been reassured that the trip was safe. On the 12th of March, two days before departure, the World Health Organisation (WHO) declared a pandemic. Subsequently, according to the University of Texas, dozens of students that went on the trip tested positive for COVID-19 when they returned to the U.S.
In response, a JusCollege spokesperson told the Independent newspaper: “We take the safety of our customers very seriously and are working with public health authorities to assist where we can. JusCollege always follows U.S. government regulations and guidance from the state department when making travel recommendations, and Mexico was not under a federal travel advisory at the time the trip departed… Our thoughts are with the students who are ill and the healthcare providers and public health officials who are working to mitigate the impact of COVID-19.”
In a call, and followed up over email, Negus-Fancey said that Pollen wasn’t in a position to cancel the spring break trip and offer full refunds at the time because the U.S. government was yet to advise travel restrictions to Mexico. He also explained that the company acts as a “curator and distributor” connecting customers with suppliers, such as hotels, airlines and nightclubs, who set their own refund policies. “The money doesn’t sit with us, it sits with our partners. We take a commission in the middle,” he said.
Adds the Pollen CEO: “All customers who didn’t want to travel were refunded at a minimum whatever was received back from clients (hotels, airlines or other providers) or they were given a 100% credit to a future trip. The team worked tirelessly over weeks to achieve this outcome for customers as it was at the discretion of clients given there were no travel warnings in place at the time about flying to Mexico. We were materially out of pocket as a result of this effort because despite the circumstances, we took a long-term view to do right by customers and as a result paid out in many circumstances where clients had not refunded us.”
Separately, following layoffs in North America and 34 furloughs in the U.K., TechCrunch has learned that Pollen has put another 56 members of staff on furlough, as the travel and events sector continues to be hit hard by the coronavirus crisis. They comprise 45 in the U.S., seven in the U.K. and four in Canada.
Confirming the latest round of furloughs, Negus-Fancey says employees are being supported by each country’s various government furlough schemes and that Pollen U.S. furloughed employees were given “over a weeks notice on full pay and we are covering their medical insurance whilst they are on furlough leave.”
Founded in 2014 and previously called Verve, Pollen operates in the influencer or “word-of-mouth” marketing space. The marketplace lets friends or “members” discover and book travel, events and other experiences — and in turn helps promoters use word-of-mouth recommendations to sell tickets. Pollen’s backers include Northzone, Sienna Capital, Draper Esprit, Backed and Kindred.
With the renewed push for more of the services we use everyday to be accessible online and in a non-physical way, a company out of Switzerland that builds tools for financial services companies to interact better with their customers via the web is today announcing a round of funding to expand its operations.
Appway, which provides software to help banks and others that transact with customers to build banking, mortgage, regulatory compliance and other service management tools, has raised $37 million in equity funding from a single investor, Summit Partners.
Summit is taking a minority stake, but the percentage (and the startup’s overall valuation) are not being disclosed.
Hans Peter Wolf, Appway’s CEO who co-founded the company with Oliver Brupbacher, said in an interview that the money will go toward continued expansion of its business, both by adding more customers and by building more tools for those customers in turn to provide services to their own users. He added that North America has been one of Appway’s fastest-growing markets, and so the plan will be to double down specifically there, alongside existing operations in Europe and Asia.
If you’ve not heard of Appway before in the world of tech, that’s not too unusual: the Zurich-based company has been quietly living, bootstrapped and profitable, behind the scenes and under the startup radar since 2003. But in the last 17 years, it’s managed to amass a long list of impressive customers — a list that features 10 out of 25 of the largest wealth managers in the world, including Credit Suisse, HSBC, J.P. Morgan, LGT, LPL Financial and Deutsche Bank, the telecoms giant Orange, KPMG and others.
The services that it provides range from online banking, mortgage software and wealth management, through to account management, onboarding of new services and customers and a long list of back-office tools to manage customers and data to help the financial services companies comply with regulatory requirements.
Business has been strong, but the reason Appway finally decided to bite the bullet and raise money, Wolf said, was to ride the wave of growth, and bring in new people to the board who could help guide what the next steps might be as its business matures.
He noted that Appway has seen an acceleration of interest in recent months — predating the current health pandemic, he added, but absolutely sped up with urgency because of it — related to “business transformation.”
Yes, that’s a term thrown around a lot in the world of enterprise, but it’s actually an important one that is propelling a lot of business for disruptive startups: Huge institutions have been using the same legacy systems for decades, and that creaky infrastructure finally is being replaced with more modern and flexible software, often sold as a service from the cloud, in order to expand what companies can do for their customers.
That’s where the current pandemic has figured in a key way for companies like Appway. A lot of financial services — especially those at the higher end of the market (e.g. wealth management) — have long existed around the concept of personal relationships and years of face-to-face service, but much of that has had to be reassessed in recent times. Some might have bristled at or resisted the changes (or investments in the changes) in the past, but their hand has been forced, so to speak, by current circumstances.
But coupled with the fact that so many people today are more accustomed to carrying out much of their lives online, the changes are turning out to be, in many cases, not as painful as you might think, and in the case of financial services, we’re seeing a big turnaround and embracing of the new platforms. And that means strong business funnels for companies like Appway.
There are a number of companies providing tools to organisations to help build and run services online. Those in the same general area as Appway include Pega, Intalio, Oracle, IBM and more. One key difference is that many of these are general purpose, aiming their low-code approach to a number of verticals, which in one regard makes them potentially much bigger enterprises, but in another means they cannot speak as specifically to the needs of any particular vertical. Appway’s focus on financial services in particular — and of course the fact that financial services happens to be a hugely lucrative industry — is one thing that stood out for Summit when making the investment.
“Unlike general purpose low-code development platforms, Appway seeks to address core pain points in the financial services industry by automating the flow of work to revolutionize the customer experience and drive digital transformation across organizations,” said Dr. Matthias Allgaier, a managing director at Summit Partners who will also join the Appway board of directors, in a statement. “We believe the company has delivered impressive, consistent capital efficient growth, and we are thrilled to partner with Hans Peter Wolf, his co-founder Oliver Brupbacher and the entire Appway team.”
When you hear about companies like these — successful startups that have been off the grid of tech media because they haven’t been tightly linked to the investment cycle or any obvious consumer news stream — suddenly raising money, you have to wonder how many more there are innovating and doing more good work in the same way.
One reason Wolf said that Appway never raised money before was because when it was founded, it was just how things were.
“In 2003, venture capital and private equity didn’t exist at all in Switzerland, and I don’t think the country’s startups were on any radar of any PE house,” he said with a laugh. “Ironically, the financial crisis was when we had our first successes in the U.S.,” partly because of its regulatory compliance tools, which were suddenly in demand. “Now, I would say it’s a steady pattern, Appway made the decision to raise growth equity during an arguably even bigger crisis.”
Indeed, as we continue to see more activity spread out beyond the most-obvious tech hubs, it may well be that yet more Appways fall under the spotlight.
In business, there’s nothing so valuable as having the right product at the right time. Just ask Zoom, the hot cloud-based video conferencing platform experiencing explosive growth thanks to its sudden relevance in the age of sheltering in place.
Having worked at BlackBerry in its heyday in the early 2000s, I see a lot of parallels to what Zoom is going through right now. As Zooming into a video meeting or a classroom is today, so too was pulling out your BlackBerry to fire off an email or check your stocks circa 2002. Like Zoom, the company then known as Research in Motion had the right product for enterprise users that increasingly wanted to do business on the go.
Of course, BlackBerry’s story didn’t have a happy ending.
From 1999 to 2007, BlackBerry seemed totally unstoppable. But then Steve Jobs announced the iPhone, Google launched Android and all of the chinks in the BlackBerry armor started coming undone, one by one. How can Zoom avoid the same fate?
As someone who was at both BlackBerry and Android during their heydays, my biggest takeaway is that product experience trumps everything else. It’s more important than security (an issue Zoom is getting blasted about right now), what CIOs want, your user install base and the larger brand identity.
When the iPhone was released, many people within BlackBerry rightly pointed out that we had a technical leg up on Apple in many areas important to business and enterprise users (not to mention the physical keyboard for quickly cranking out emails)… but how much did that advantage matter in the end? If there is serious market pull, the rest eventually gets figured out… a lesson I learned from my time at BlackBerry that I was lucky enough to be able to immediately apply when I joined Google to work on Android.
COVID-19 quickly put the stock market in the ICU, with signs of unprecedented volatility and declines. However, the market’s resilience and swift action by the Fed made this downward spiral short-lived. The Russell 2000 Index, a benchmark for small-cap stocks, is one of several indices that highlights this.
Within a one-month period from late February into March, The Russell 2000 Index was down more than 40%, signaling the end of a long bull market and entrance into bear territory. Yet, two months later, at the end of May, the Index is up over 35% from its low. In the private market, the impact of volatility on healthy, pre-COVID-19 software company valuations is much easier to track. As SaaS founders consider their financing options, the picture might be a bit less glum than they might imagine.
Changes to private market valuations often lag behind what transpires in the public markets. Also, fundraising cycles for private companies generally take 2-3 months from start to close. Unlike the 2000 dot-com crash and the 2008 Great Recession, where valuations dropped for extended periods of time, private company valuations, for the most part, have not had time to adjust for the volatility seen in the public markets.
Danggeun Market, the startup behind Karrot, South Korea’s largest neighborhood marketplace and community app, announced today that it has raised a $33 million Series C. The round was led by Goodwater Capital and Altos Ventures.
The funding brings Danggeun Market’s total raised so far to $40.5 million. Its list of investors also include Kakao Ventures, Strong Ventures, SoftBank Ventures and Capstone Partners. Danggeun Market, which launched Karrot in the United Kingdom last November, will use part of the funding to expand into more international markets and increase its monetization tools.
One of Karrot’s most unique features is that its peer-to-peer marketplace only shows people listings from sellers located within a six-kilometer radius (the distance is set slightly wider for more remote areas), and most transactions are completed in person. As a safety measure, all user identities are verified through their mobile numbers and location.
In a call with TechCrunch, Danggeun Market co-founder and co-CEO Gary Kim and vice president Chris Heo said Karrot’s model works because of the high population density in many South Korean cities. As the app launches overseas, the company will focus on other densely populated areas, especially ones that don’t already have a dominant neighborhood marketplace app.
Danggeun Market planned to enter three new countries this year, but slowed the pace of its expansion because of the COVID-19 pandemic. Instead, it will focus on enhancing its community features in South Korea, with the goal of launching in at least one new country by the end of this year.
Danggeun Market was founded in 2015 by Gary Kim and Paul Kim, both of whom previously worked at KakaoTalk, South Korea’s largest messaging app. Before Danggeun Market launched, the most popular online secondhand marketplace in South Korea was website Joonggonara, but it didn’t have a mobile app.
Being designed for smartphones helps Karrot differentiate from other peer-to-peer marketplaces. For example, its distance limits make listings easier to spot, and also encourages interactions among neighbors. Its approach to neighborhood networking is also the foundation of the company’s monetization model. Instead of charging listing fees, the app is free to use, and the company makes money through hyperlocalized advertising.
Danggeun Market says its monthly active users have grown 130% year-over-year, reaching seven million in April and making Karrot the second-largest shopping app in South Korea after Coupang, the country’s largest e-commerce platform. Users spend an average of 20 minutes per day on the app, and gross merchandise value increased by 250% year-over-year, despite the COVID-19 pandemic.
Heo said the number of listings on the app actually grew from 4.4 million in January to 8.4 million in April, as more people spent time at home and found things they wanted to get rid of, and also preferred to remain within their neighborhoods. Danggeun Market’s community features also saw a jump in the number of postings made.
Heo said face-to-face transactions continued, because many South Koreans were already used to wearing masks and other safety measures that were ramped up during the pandemic. The company added a new feature called Karrot Help, with tools to help match people with neighbors who needed help running errands and a mask inventory checker for nearby pharmacies, and implemented tools to automatically control the price of mask listings and prevent profiteering.
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